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COUNTY ASPHALT, INC. v. LEWIS WELDING & ENGG. CORP

November 30, 1970

COUNTY ASPHALT, INC., Plaintiff,
v.
The LEWIS WELDING & ENGINEERING CORPORATION, Defendant


Croake, District Judge.


The opinion of the court was delivered by: CROAKE

MEMORANDUM

CROAKE, District Judge.

 This is a diversity action, having been removed to this court by defendant, from the New York State Supreme Court, Westchester County. The case concerns among other issues, "transactions in goods" within the scope of the Uniform Commercial Code's article on sales, *fn1" which were purchased by plaintiff, a New York corporation, from defendant, an Ohio corporation.

 On December 22, 1964, and January 19, 1965, the parties to this action executed in New York, four contracts *fn2" for the purchase and installation of asphalt plants at two locations, and automatic batch control systems for two other asphalt plants, all in New York State. The four contracts, prepared by the seller, defendant herein, all contained a standardized page entitled "General Terms and Conditions," which purported to limit defendant's warranties and plaintiff's remedies for breaches of warranty or contract. Plaintiff's payments were to be made periodically, according to the progress of defendant's performance, and title was to remain in defendant until the price had been paid in full.

 Plaintiff made partial payment, and then instituted suit on December 24, 1965, seeking damages for breach of contract, breach of warranty, and negligence, and also specific performance of the contracts. Plaintiff also sought its disbursements under an asserted oral contract in providing labor, equipment, and material to assist defendant in defendant's erection of the plants.

 Defendant counterclaimed for the amount due under the contracts, which the parties have stipulated to be $385,229.25, plus interest. Defendant also claimed that the making and filing of a financing agreement pledging the plants and certain other equipment to the Irving Trust Company as security for loans aggregating $600,000 plus interest, amounted to a conversion. Defendant claimed an alternative right to the $385,229.25 as damages under this theory, plus $700,000 punitive damages. Defendant also claimed that the replacement of certain parts of the plants by plaintiff worked a pro tanto conversion. Other counterclaims sought the rental value for plaintiff's use of an old plant that was to have been traded in as part of the purchase price of the new plants, under a theory of quasi-contract, and an accounting by plaintiff of profits from its use of the two plants.

 The case was tried to a jury and the undersigned for nineteen days. At trial, it was ruled that the plaintiff could not prove alleged lost profits. *fn3" The action for specific performance of the contract was abandoned. Defendant was granted a directed verdict, with plaintiff's acquiescence, as to the automatic batch control contracts (a minor part of the entire case). Otherwise, all issues survived for jury consideration.

 The issues were presented to the jury in the form of a general verdict with written interrogatories, pursuant to Rule 49(b), F.R. Civ. P. *fn4" The proposed interrogatories were submitted to counsel for their comments well in advance of their summations. Each side proposed minor changes and additions, which were made. The jury was then charged on the several issues.

 The jury found that the defendant had substantially performed the contracts, and that the plaintiff owed a net amount of $226,000, after deduction of $160,000 for expenses of plaintiff, from the approximately $386,000 unpaid balance owing defendant.

 The jury also found that the defendant had failed to provide the remedy of repair and replacement of defective or nonconforming parts, which the contracts stated was to be the exclusive remedy. This finding obviated the necessity for consideration of any "failure of essential purpose" under the Uniform Commercial Code, Section 2-719(2). *fn5"

 The jury further found that neither party had been negligent. It found that there had been a conversion; it also found, however, that no damages flowed therefrom. And it found that the plaintiff was not liable for any rent.

 Both parties have moved to amend the judgment which was entered for the defendant, The Lewis Welding and Engineering Corporation, in the amount of $226,000. Plaintiff has so moved because of a different interpretation of the jury's findings. The above discussion makes evident the undersigned's conclusion that the general verdict and the replies to the written interrogatories are entirely consistent and harmonious. Any other interpretation of the replies to the interrogatories would render them inconsistent both with the general verdict and with each other.

 Defendant has moved to have the judgment amended to include an award of pre-judgment interest in its favor. Prejudgment interest is a part of the entire recovery; along with such limitations of remedy as exclusion of consequential damages, it is one aspect of the general issue of the measure of recovery for breaches of contract. St. Clair v. Eastern Air Lines, Inc., 302 F.2d 477 (2d Cir. 1962); Restatement (second) Conflict of Laws (Proposed Official Draft, 1968) ┬ž 207, Comment e; but cf. Kilberg v. Northeast Airlines, 9 N.Y. 2d 34, 211 N.Y.S. 2d 133, 172 N.E. 2d 526 (1961).

 Defendant has asserted that New York law governs the interest issue, while plaintiff argues for Ohio law. The appropriate standard for determination of a choice of law issue in a diversity case is the conflicts of law rules of the forum state (New York). ...


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